According to Wikipedia's definition of Web 2.0:
Web 2.0, a phrase coined by O'Reilly Media in 2004, refers to a perceived or proposed second generation of Web-based services—such as social networking sites, wikis, communication tools, and folksonomies—that emphasize online collaboration and sharing among users. O'Reilly Media, in collaboration with MediaLive International, used the phrase as a title for a series of conferences, and since 2004 some technicians and marketers have adopted the catch-phrase. Its exact meaning remains open to debate, and some experts, notably Tim Berners Lee, have questioned whether the term has meaning.
The last, compact, definition of Web 2.0, according to Tim O'Reilly is this one:
To summarize, web 2.0 sites are those that utilize user-generated content and rely on network effects to increase and maintain their value. Sites such as YouTube, Craigslist, MySpace, and even Wikipedia itself, are all prime examples of web 2.0 sites. Of these, I think Craigslist fits the description the best. The site relies exclusively on user-generated content, there are social networking aspects to the site, and its value is directly related to the number of users using it. It serves over 5 billion page views per month, putting it in 34th place overall among web sites world wide, 8th place overall among web sites in the United States (per Alexa.com on December 29, 2006), to 10 million unique visitors. With over 10 million new classified ads each month, Craigslist is the leading classifieds service in any medium. The site receives over 500,000 new job listings each month, making it one of the top job boards in the world. The classified advertisements range from traditional buy/sell ads and community announcements, to personal ads and many others.
"Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform. Chief among those rules is this: Build applications that harness network effects to get better the more people use them. (This is what I've elsewhere called 'harnessing collective intelligence.')".